Have a look at this video clip: Macworld Expo 1997 Park Plaza Castle, Boston
If you don’t have the time for the whole clip, just watch the last third or so outlined below.
Remember, if you’re old enough, what was being said in the press at the time. Â If you were ‘in the industry’ back then my hunch is, even as you watch you’ll notice things that actually happened that were, at best, mischaracterized in the press and in the thing people didn’t yet call ‘the blogosphere’.
After the summary, I’ll let you in on the real deal.
At about 2/3rds into the clip Steve Jobs talks about Apple’s relationship with Microsoft:Â “The discussions actually began..uh… because there were some..uhh… patent disputes.” – Steve Jobs who very rarely says “uhh”
The results of that discussion?
1) A five year deal to cross-license patents. I think, quite likely, this agreement has been renewed and this is why we have a Mail.app that can talk to Exchange servers and other useful elements of MacOS and Windows interoperability. (Update 8.13.2012: The Verge seems to have dug up the actual agreement.)
2) Â Microsoft committed to 5 years of support for Office on the Mac including the same number of releases for Mac as for Windows.
3) IE would become the default browser on MacOS.
The crowd booed. Â You may recall, there was a little bit of tech industry drama at the time around the issue of Netscape vs IE. Â My how times haven’t really changed.
Remember, at the time, Netscape Navigator and the OpenDoc-based CyberDog were also installed as alternative browsers with IE on MacOS 8 because, as Steve says in the clip “…we believe in choice”.
An amusing side note, especially for those who were at Macworld Expo in ’97 is that throughout the conference, Apple employee presentations where reference was made to IE the phrase “My Browser Of Choice”  came with it.  The phrase “My Browser of Choice” was uttered with the same formality and occasional knowing smirk one often sees on the sports star holding the Gatorade bottle label-out toward the camera when drinking. The same glance that says “Yeah but when the camera looks away, we both know I’m going to spit this Lion piss  out and drink water.” in a manner so subtle it lets them keep the endorsement, barely.
4) Â Apple and Microsoft will collaborate on Java to ensure compatibility.
Listen to Steve as he says this in the presentation. One gets he sense he and Gates agreed even then that client-side Java would turn out to be about as useful as… well… about exactly as useful it has turned out to be.
5) Microsoft would invest 150 million dollars at market price in non-voting shares of Apple Computer . Microsoft would hold those shares for at least three years. You can google for yourself what those shares would be worth now and find out how much too soon Microsoft sold. (Disclosure: I have been long AAPL since right around then)
Gates then shows up on the big screen before the gathered faithful and says , among other things, that Microsoft had more than 8 million customers on Macintosh. Think about that number when you recall the talk of the Mac’s allegedly non-exitstent market share at the time. Think about that word ‘customers’. Â That number from Gates didn’t count Macs in the installed base, it was a count of customers, not seats of Office shipped on trivial-to-copy floppy disks. The press at the time would have had the world believe there were no Macs in use other than the million or so sold in a typical quarter at the time. Considering that I personally touched about a thousand Macs in 1997 as part of my consulting practice it always struck me absurd when I’d read how many people thought Mac market share was the same as quarterly sales.
Bill Gates announced Office ’98 for Mac. Â Those who remember those days will recall that the version of Office in the wild prior to ’98 was 4.2.1. Â Many may recall how many people fought to keep Word 5 working because the version of Word that came with Office 4.2.1 was Word 6. A version of Word so bad that MacOS 7.5.2 seemed like stable software. (Hint: 7.5.2 is considered by many to be the single worst major release of MacOS in Apple’s history and yes, 7.5.2 was a major release despite the version number. PowerMacs, Open Transport, fun, fun, fun) As Gates promised, Office 98 was pretty darned good and actually very Mac-like especially for a Microsoft product.
At the time, the MacBU, The  Mac Business Unit  at Microsoft (Pronounced MacBoo) was the most profitable unit at Microsoft. Note, profit doesn’t mean revenue, clearly Windows and Windows Office and, perhaps even Flight Siumlator dwarfed the MacBU in sales but Microsoft themselves described MacBU as ‘the most profitable unit’  around and after the release of  MacOffice 98.
Common themes in the coverage then were ‘Apple taking sides in the Browser War’, ‘Apple being bought by Microsoft’, ‘Apple settled the “look and feel lawsuit”,  ‘Apple concedes that Microsoft won the fight for the desktop’, ‘Apple bailed out by Microsoft’ (go look at the financial history. Even at the time, 150 million did not , by a long shot, constitute a bailout), Generally speaking the press missed the point.
Don’t believe me that those beliefs became the ‘conventional wisdom’ about that day in 1997?
Here’s two easy links: http://www.wired.com/thisdayintech/2009/08/dayintech_0806/ and http://lowendmac.com/orchard/06/apple-vs-microsoft.html.
Search, you’ll find more.
Now that you’ve seen what I saw when I was there, here are a few things you may not have been aware that reveal the real nature of the deal .
The press described, on the rare occasions they mentioned it at all,  the patent cross licensing deal as if it was settling the old ‘look and feel lawsuit’. It wasn’t, that lawsuit. It was this one. At the time one could find on the interwebs side by side comparisons of Microsoft Video For Windows and QuickTime for Windows source code.  (some comparison is still here) Whole chunks of code matched byte for byte line after line. I saw it. The San Francisco Canyon company ‘helped write’ both products for two different clients.
The press at the time would also have had us (existing and would-be customers of beleaguered Apple Computer) believe that Microsoft’s rummaging in their couch and pulling out $150 millon in Cheeto-crumb-covered change to buy a few Apple shares was a concession in the famous United States of America. vs Microsoft anti-trust trial. You don’t have to be a lawyer to realize that if you are accused of being a monopolist, buying a stake in the other company you share 100% of a market with isn’t going to make you less of a monopolist.
The investment was part of a settlement deal. Just that simple.
Microsoft wanted Apple to “Knife the Baby”. Wanted Apple to kill QuickTime in exchange for Microsoft’s willingness to continue to make a tidy profit from selling Office to Mac users.
Where did I get such a vile turn of phrase as “Knife The Baby”, why from legal testimony of course.  Give that document a read.  (It was also printed  as “Don’t Knife The Baby” on some t-shirts  produced by [redacted] and circulated within the QuickTime engineering team at the time.)
Having read it, ask yourself if the patent dispute that brought Apple and Microsoft to the table for a discussion  was driven by evidence that source code for Video for Windows and QuickTime for Windows were, alledgedly, so similar .
Could Apple have, perhaps won a lot of concessions, been able to ‘facilitate’ collaboration because Microsoft might have preferred announcing cooperation to announcing that they’d settled a lawsuit they may have thought they’d lose horribly?
Now, those astute among you may be scratching your chin thinking about why Apple doesn’t want Flash on iOS and whether it’s the exact same reason Microsoft was worried about QuickTime.
Those who have been paying really close attention might remember QuickTime Wired Sprites. Some might even recall this little footnote: http://lists.apple.com/archives/quicktime-users/2007/Dec/msg00050.html. (Disclosure: As it happens, I was honored to have won enough support from Apple to get some of the movies built in projects I worked on onto Apple’s “known to be safe” list. I am eternally grateful to my friends then on the QuickTime Team for being willing to help.)
A grizzled veteran might likely speculate that “Multiple vulnerabilities… in QuickTime’s Flash media handler” were just too much to patch. It’s logical to assume Apple had to rely on Adobe to fix those vulnerabilities and, perhaps that Adobe wouldn’t or couldn’t.  This was the first time QuickTime ever ‘broke content’ in any significant way. These were dark days.
Now, knowing all this, and why Microsoft wanted Apple to “Knife The Baby”, perhaps it’s one might conclude it’s time to encourage Apple to do the one thing they never did back in the ‘good old days’: Â Create and sell tools to author HTML 5 rich media. This notion, beloved readers, will be a topic for another day: Truly enable a standard and not leave it to languish or fragment as a ‘third party opportunity’.
